The following table presents the budgeted overhead costs for the dyeing and weaving cost pools: Dyeing (based on 2,193,000 MH) Weaving (based on 10,200,000 DMLH) Variable costs Indirect materials $ 0 $ Maintenance 6,580,000 7,585,000 15,480,000 5,535,000 2,710,000 Utilities Fixed costs Indirect labor 382,000 1,750,000 Depreciation 2,249,000 748,000 280,000 5,865,000 Other $ 17,544,000 $ 31,620,000 Total budgeted costs 1. 2. 3. 4. 5. Prepare a direct material usage budget in both units and dollars. Calculate the budgeted overhead allocation rates for weaving and dyeing. Calculate the budgeted unit cost of a blue rug for the year. Prepare a revenues budget for blue rugs for the year, assuming Xuan sells (a) 255,000 or (b) 240,000 blue rugs (that is, at two different sales levels). Calculate the budgeted cost of goods sold for blue rugs under each sales assumption. Find the budgeted gross margin for blue rugs under each sales assumption. What actions might you take as a manager to improve profitability if sales drop to 240,000 blue rugs? How might top management at Xuan use the budget developed in requirements 1-6 to better manage the company? 6. 7. 8. Xuan Manufacturing Company manufactures blue rugs, using wool and dye as direct materials. One rug is budgeted to use 43 skeins of wool at a cost of $6 per skein and 0.8 gallons of dye at a cost of $5 per gallon. All other materials are indirect. At the beginning of the year Xuan has an inventory of 454,000 skeins of wool at a cost of $998,800 and 3,500 gallons of dye at a cost of $22,050. Target ending inventory of wool and dye is zero. Xuan uses the FIFO inventory cost flow method. (Click the icon to view the additional information.) There is no direct manufacturing labor cost for dyeing. Xuan budgets 40 direct manufacturing labor-hours to weave a rug at a budgeted rate of $16 per hour. It budgets 0.2 machine-hours to dye each skein in the dyeing process. (Click the icon to view the budgeted overhead costs.) Read the requirements. Requirement 1. Prepare a direct material usage budget in both units and dollars. Begin with the physical units portion, then prepare the cost budget portion of the direct material usage budget. Direct Material Usage Budget in Quantity and Dollars Material Wool Dye Total Physical Units Budget Direct materials required for skeins gal Blue rugs Cost Budget Available from beginning direct materials inventory (under a FIFO cost-flow assumption)